Best Buy hits 9-year low; Urban Outfitters rallies

Moves show investors willing to reward profit-growth generators

By

ArtiPatel

SAN FRANCISCO (MarketWatch) — Best Buy Co. shares extended losses to a nine-year low Tuesday, while Urban Outfitters Inc. climbed on the back of well-received quarterly financial results to dominate among retail-sector gainers.

Best Buy’s
BBY, -1.72%
shares, falling as low as $16.25, set the pace for decliners among S&P 500 Index
SPX, -1.42%
components. The Richfield, Minn.-based electronics retailer reported a second-quarter profit plunge of 90% and not only suspended its current forecast but said that it wouldn’t provide a new outlook.

“We continue to argue that the structural issues are overblown, and that product cycle weakness is the primary culprit of this ongoing weakness,” Janney Capital Markets analyst David Strasser wrote in a note. “Perhaps once a new chief executive officer gets deeper into the long-term plan, he will re-evaluate the international businesses.”

On Monday, Best Buy’s board announced Hubert Joly, most recently the top executive in charge of the Carlson travel and hospitality company, as its new CEO and president. Joly was hired for track record of guiding successful turnarounds in the media, technology and services sectors, the company said.

Best Buy founder Richard Schulze’s efforts to take the company private foundered over the weekend.

In a statement, Schulze said he was “disappointed” by the Best Buy board’s “abrupt public termination of our private discussions” and had “believed we were close to an agreement for a reasonable standstill period.” Instead, the board terminated talks and announced Joly’s hiring.

Best Buy’s shares have declined over 23% since January and almost 26% over the past 12 months. In after-hours trade, the stock fell 2.3% to $17.50 a share after regaining some of its earlier losses.

Reuters

Also Tuesday, Urban Outfitters
URBN, -0.50%
hit a 52-week high at $37.65. The company dominated the S&P 500’s gainers throughout the session, inching up in after-hours trade to $37.03 a share.

The apparel company, which operates a namesake store plus the Anthropologie and Free People brands, reported late Monday second-quarter earnings that beat analysts’ consensus estimate by 9 cents, posting an 11% jump in revenue and 8% increase in profit, as compared with a year ago.

The Philadelphia-based retailer’s same-store sales climbed by 6% for Urban Outfitters and by 12% for Free People but were flat for Anthropologie. The stock is up 34% since January and 42.5% from a year ago.

Barnes & Noble Inc.
BKS, -0.93%
shares fell 3.9% to $11.87 during the session after reporting fiscal first-quarter 2013 revenue for its digital book reader, Nook, were flat compared with a year ago. While digital content sales increased 46%, driven by the 50 Shades of Grey book series, device sales declined thanks to lowered average selling prices and production scaling issues with its Glowlight product.

Williams-Sonoma Inc.
WSM, -2.57%
which operates its namesake, Pottery Barn and West Elm brands, also released fiscal second-quarter earnings after the close. The San Francisco-based retailer’s total revenue rose 7.3%, profits jumped 10% and comparable-store revenue increased 7.4% from a year ago. Shares surged 9.5% at $41.87 in after-hours trades.

After the close, Monroe, Mich.-based La-Z-Boy Inc.
LZB, -1.29%
released its fiscal first-quarter 2013 earnings, reporting profit fell about 90%, erasing year-ago gains, but still in line with analyst expectations. The stock jumped 8.1% $14.60 a share in after-hours trades and has been up about 88% over the past 12 months.

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